News Updates October 24, 2022
1. US charges Chinese intelligence officers for bribing government employee.
Two Chinese intelligence officers were charged with obstruction of justice for bribing a U.S. government worker acting as a double agent, according to the U.S. Attorney’s Office.
The two officers, Guochun He and Zheng Wan, tried to recruit the government worker to steal files related to an "ongoing federal criminal investigation and prosecution of a global telecommunications company" based in the People's Republic of China (PRC), according to a statement released Monday.
But in fact that worker was acting under the control of the Federal Bureau of Investigation (FBI), the statement said. The files were from the U.S. Attorney’s Office for the Eastern District of New York.
"This was an egregious attempt by PRC intelligence officers to shield a PRC-based company from accountability and to undermine the integrity of our judicial system," U.S. Attorney General Merrick Garland said in a press conference Monday. Cell phone manufacturer Huawei is likely the company in question, according to the Associated Press. When asked if that was the case, assistant US Attorney Alexander Solomon declined to comment, during the press conference.
2. Gensler: SEC sees 'centralization' in crypto markets.
Securities and Exchange Commission Chair Gary Gensler doesn’t view decentralization as a fact of crypto markets, despite the origins of digital currencies in circumventing centralized authorities.
“There’s a tendency for central intermediaries to benefit from scale, network effects, and access to valuable data. Though technological innovations repeatedly disrupt incumbent business models, centralization still tends to reemerge,” Gensler said in remarks prepared for a virtual appearance at the Securities Industry and Financial Markets Association’s annual meeting in New York City.
“We’ve even seen centralization in the crypto market, which was founded on the idea of decentralization," Gensler warned. "This field actually has significant concentration among intermediaries in the middle of the market.”
Added the SEC chair: “Thus, we must remain vigilant to areas where concentration and potential economic rents have built up, or may do so in the future.”
Gensler suggested in a question and answer session during his virtual appearance that most, if not all, crypto exchanges violate securities law by listing unregistered securities.
“As it relates to the intermediaries, the so-called crypto exchanges or lending platforms and the like, they’re highly centralized," said the SEC chair. "They tend to have hundreds of tokens. It’s sort of beyond probabilities that there’s some securities tokens on them.”
Gensler asked exchanges to come in and ask the securities regulator if they are unclear as to whether a cryptocurrency or token could be viewed as a security, and said the SEC could work on a case-by-case basis as to whether or not an exemption is needed to be made for a particular project.
3. Yellen doubles down on call for more crypto enforcement.
The government should use its enforcement powers to crack down on crypto scams, Treasury Secretary Janet Yellen said at a financial conference.
The U.S. Treasury Department issued a series of reports on digital assets this fall, which called for more enforcement and new digital asset regulations.
The U.S. government should use its enforcement authorities to crack down on crypto scams and operational failures, Treasury Secretary Janet Yellen said, reiterating her agency’s call for “beefed up” enforcement on digital assets.
The Biden administration released a series of digital asset reports in September and October, in an attempt to unite the many federal agencies that touch cryptocurrency issues. Yellen spoke about the reports at the Securities Industry and Financial Markets Association’s annual meeting in New York City.
“Our report found that there are too many instances of fraud and scams and operational failures,” Yellen said. “There are some existing enforcement authorities and we would like to see those beefed up, and greater enforcement in this area.”
4. EU financial authorities increase coordination in light of MiCA, says EBA chair.
The coordination between the European Union's financial supervisors has "increased tremendously" and will continue to do so thanks to new crypto regulatory framework, said European Banking Authority’s Chair Jose Manuel Campa.
Campa made the remarks while addressing the European Parliament’s Committee on Economic and Monetary Affairs. The EBA chair referred to legislation before the Parliament, including the Markets in Crypto-Assets framework expected to pass in November. After the anticipated passage of MiCA, Europe’s financial watchdogs will have a key role in finalizing new crypto rules will be implemented across EU member states in the coming months.
The proposed regulatory framework for digital assets, as well as cybersecurity legislation before the Parliament, will be a "qualitative change" for the EU, said Campa. "This is not only for the financial sector - that qualitative change is broader in society.”
Campa's remarks came as part of a regular appearance by the three heads of EU financial authorities before the European Parliament. The heads of the European Securities and Markets Authority and the European Supervisory Authorities representatives also testified.
MiCA receives its expected final parliamentary vote in November, regulators will grapple with multiple questions around how to apply the new law to digital assets, though MiCA is not expected to be enforced until 2024 at the earliest.
5. Russian Parliament Rejects Mining Bill Allowing Crypto Payments, Expects New Draft.
The lower house of Russian parliament, the State Duma, has voted against a piece of legislation designed to regulate cryptocurrency mining. While lawmakers turned down that proposal, which also aimed to legalize crypto payments in the country, another draft law on mining, which permits cross-border transactions with digital assets, is expected in the legislature in the near future.
Alternative Proposals to Regulate Crypto Mining Clash in Russian Parliament
This week, the State Duma of the Russian Federal Assembly voted to reject a draft law on cryptocurrency mining. The bill “On Mining in the Russian Federation,” was submitted earlier by members of the liberal New People faction.
Lawmakers criticized the sponsors for failing to properly formulate regulatory principles for the activity as well as requirements for data centers and mining operators and suggest a procedure for the taxation of mining companies.
Representatives of the parliamentary committees that reviewed the legislation also described it as fragmented and ambiguous, the Russian crypto news outlet Bits.media reported. They highlighted it doesn’t specify how miners and their equipment would be registered or how those who mine as individual entrepreneurs would be identified.
The rejection of the bill follows a recommendation by the Financial Market Committee. Its members noted that it provides for the use of cryptocurrencies for payments inside the Russian Federation, when the country’s constitution defines the Russian ruble as the only legal tender and bans so-called “monetary surrogates.”
6. Crypto Whales in South Korea to Come Under Surveillance to Prevent Money Laundering.
The Financial Service Commission in South Korea will monitor crypto whales with more than 100M won in assets. It seeks to prevent any money laundering or illicit activity.
South Korea’s Financial Service Commission has announced new rules for the crypto market that mandates the monitoring of crypto holders who have more than 100 million won ($347,000) in the asset class. This is an effort to ensure that no money laundering takes place, one of the many steps the financial regulator is taking to enforce AML.
It says that “the larger the proportion, the higher the risk of money laundering” and believes that stablecoins especially are likely to be used for criminal purposes. The report reads,
“In the case of an independently listed virtual asset, it is possible that it did not meet the listing criteria of other virtual asset operators, and it can be evaluated that the risk of money laundering of virtual asset operators with a high proportion of the virtual asset is high.”
This is yet another step by the FSC to enforce some rules on the market. The collapse of the Terra ecosystem roiled the country. Officials have now redoubled their efforts to ensure investor protection.
Crypto whales facing extensive AML rules
South Korea’s Financial Intelligence Unit (FIU) is an agency dedicated to preventing money laundering and illegal fund flows. It recently conducted a survey on crypto exchanges focusing on AML violations and counter-terrorism financing obligations.
The agency concluded that there was insufficient compliance as far as these requirements were concerned. It has said that it will regularly disclose illegal transactions and activities. It also encourages exchanges to establish a proper AML system.
7. Bitcoin Price Analysis: Tight Range Persists - 25 October 2022.
Bitcoin (BTC/USD) awaited fresh technical guidance early in the Asian session as the pair failed to stray too far from the 19231.51 area, representing the 76.4% retracement of a key appreciating range from 3858 to 69000, its all-time high. Stops were elected below the 18827.44 area during a recent pullback, a level that represents the 61.8% retracement of the appreciating range from 18131 to 19954.14, as BTC/USD fell to the 18659 area. Traders have encountered some technical resistance around the 19257.70 area, a level that represents the 50% retracement of the appreciating range. Additional downside retracement levels in this range include the 18561.26 and 18521.15 areas. The recent series of lower peaks has intensified BTC/USD’s downside risks with larger Stops accumulating below the 17803, 17701, 16966, and 16503 areas, significant technical levels related to historical upside pressure around the 3858 and 9819 levels.
Additional significant technical areas on the downside include the 16990.14, 14500.15, and 10432.73 areas. Following the ongoing negative sentiment, the 20433 area has emerged as an area of consistent technical resistance that is technically related to selling pressure that commenced around the all-time high of 69000. Additional upside price objectives and areas of potential selling pressure include the 21574, 22433, 23496, 24577, and 25214 areas. Traders are observing that the 50-bar MA (4-hourly) is bearishly indicating below the 100-bar MA (4-hourly) and below the 200-bar MA (4-hourly). Also, the 50-bar MA (hourly) is bearishly indicating below the 100-bar MA (hourly) and below the 200-bar MA (hourly).
Price activity is nearest the 50-bar MA (4-hourly) at 19244.03 and the 100-bar MA (Hourly) at 19150.01.
